The Hindu : National : Special Economic Zone Bill passed

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Wednesday, May 11, 2005

National

National

Special Economic Zone Bill passed

Special Correspondent

New law aims at boosting economic growth, exports and employment

NEW DELHI: The Lok Sabha on Tuesday passed the long-awaited Special Economic Zone legislation by voice vote after incorporating the amendments suggested by the Left parties to ensure that States can take decisions on the extent of flexibility in labour laws. Commerce and Industry Minister Kamal Nath brought an amendment to delete Section 50 (B) of the Bill for the purpose.

Replying to the debate on the Bill, Mr. Kamal Nath said the Government would not allow any violation of the labour laws within the SEZ. The umbrella legislation would give a big push to exports and foreign direct investment. The new law was aimed at encouraging public-private partnership to develop world-class infrastructure, attracting domestic and foreign private investment and boosting economic growth, exports and employment.

The Left parties also sought another amendment to ensure that the State Governments were not bypassed while setting up the SEZs.

The Minister assured them that though the Bill provided the mandatory sovereign right to set up the SEZs anywhere in the country, the Centre would always consult and collaborate with the State Governments while setting them up. Responding to their demand that amendments be brought in while introducing the Bill in the Rajya Sabha to incorporate the assurance, he said the Government, instead, would build in necessary provisions while framing the rules.

The Minister said that with passage of the Bill, many large format multi-product SEZs that had so far been unable to achieve financial closure would quickly do so. Besides, he estimated that FDI inflows as a result of the new law could be of the order of $2 billion over the next three years and additional employment would be about 50,000 in the next year.

Single window clearance

The Bill provides a single window clearance and approval mechanism to establish the SEZs as well as production units inside the zones. It contains income tax concessions for both SEZ units as well as SEZ developers.

The units will now be eligible for 100 per cent income tax exemption for five years, 50 per cent for the next five years and 50 per cent of the ploughed back export profits for the next five years. The SEZ developers continue to get 100 per cent income tax exemption for 10 years in a block period of 15 years.

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